Renting out your U.S. property while you remain in Canada may sound tricky, but it’s actually not that hard. It’s something many U.S. property owners do regularly, whether they are able to travel across the border or not.
When you last left the U.S., however, you may not have planned to rent out your home at this point so you may have some additional prep work on your hands. Here are a few things you can do to get your home renter-ready.
1. Hire a property management company
A property management company can help you find quality tenants, set up lease agreements, collect rent, and handle any emergencies that may arise.
Because you won’t physically be at your property to get it ready for showings — and future tenants — it’s worth hiring a property management company to take care of the on-the-ground aspects of renting out your place.
A property management company can help you find quality tenants, set up lease agreements, collect rent, and handle any emergencies that may arise. They can also help you get your home ready for new occupants and give you pointers about any maintenance or aesthetic changes that may create a more attractive space for renters.
2. Ensure your home is problem-free
One of the first steps to getting your home ready for renters is to make sure it’s in great move-in shape — you don’t want your renters to have to deal with a leaky roof or broken refrigerator. Before you list your home for rent, enlist your property manager to check the roof, gutters, major appliances, and outlets. You’ll also want any outdoor space — such as your driveway or walkways — to be examined for trip-causing cracks or significant wear and tear.
Keep in mind, it’s far easier to do maintenance and repairs before you rent your place out, versus dealing with issues once someone else moves in.
3. Clean it from the inside out
Obviously, your home will be more attractive to renters if it’s clean — but just how tidy did you leave it? And how much dust has accumulated since you’ve been gone?
Arranging for a deep cleaning is a smart move — especially given today’s enhanced emphasis on sanitization. Beyond a surface scrubbing, you’ll want your windows, blinds, and appliances sparkling. It’s also a good idea to have your carpets shampooed and your air filters replaced as part of this process.
If you’re considering renting your home out longer-term (i.e., beyond a season or two), you might even consider having a fresh coat of paint applied for an extra bright and clean feel.
4. Let your insurance company know
When it comes to insurance, you may need to switch your policy to a landlord property insurance policy to cover any loss or damage that might result from tenants’ negligence, natural disasters, fire, or water damage. While you’re at it, make sure you have liability insurance to cover slip and falls or other injuries tenants (or their guests) might have on the property.
5. Set a price
Rents vary widely depending on your location, type of property, season, and more. You’ll therefore want to research rental rates for comparable properties in your area to set a realistic list price. If you’re renting out your property year-round, take a look at prices at different times of year to set a price that accurately reflects market value.
Your property management company can be a great resource here, as they should have sufficient pricing data on hand for homes like yours in your area.
6. Find and screen tenants
This is where a property management team can really make a difference for you. Tenant screening can get tedious and complicated, and owners who are renting out their homes for the first time may not be able to spot red flags. Good property management companies have a reliable and verified screening process that helps them select tenants who will pay rent on time, minimize wear and tear of the property, and cause fewer problems overall.
If you decide not to use a property management company to find tenants, keep in mind that where you advertise your rental will partly depend on how long you’re renting and what kind of arrangement you’re looking for. For example, sites such as Airbnb, VRBO and HomeAway are very popular among the short-term rental set. If you’re looking for a longer-term rental (i.e., a full season or more), consider sites like RentalsOnline.com or rentcafe.com.
Once you’ve found a potential tenant, have them fill out an application that tells you their name, employer, previous landlords and references. It’s also smart to get their signed consent to check their credit reports and criminal history.
7. Determine how you’ll manage the lease
A property management company can take care of all the paperwork for you — and any headaches that come later with rent collection. As experts in this business, they have standard lease agreements on hand that can be customized to your needs, making this part of the process virtually hassle-free.
If you decide to take care of managing the lease yourself, here are some things to include in the paperwork:
- The amount of the security deposit, and what it covers
- Whether or not you’ll allow pets — and if so, will you ask for a pet deposit?
- Who is responsible for yard maintenance
- A list of utilities that the tenant is responsible for
- A clause that gives you access to do maintenance checks at an interval you’re comfortable with
It’s a good idea to have a lawyer look over the lease agreement to ensure you and your home are protected before you present it to your tenants.
8. Know the rules
If your property is part of a condominium or organized community, be sure to check the rules about renting out your property. It is key to understand your homeowner association rules and by-laws and get savvy about all restrictions about rentals.
Beyond association rules, it’s important to know the tax rules that apply to you as a Canadian earning income in the U.S. While you may be a tax resident of Canada, you’ll need to report U.S. rental income to the IRS if you rent out your property for 15 days or more per tax year. It’s best to seek advice from a cross-border tax expert to ensure you comply with all the rules while minimizing the amount of tax you’ll have to pay.
RBC Bank has created a referral network of cross-border experts to help you with the tax and legal issues that can go along with renting your U.S. property.
Renting out your U.S. home can help you offset your ownership costs, create a U.S. cash flow, and offer a silver lining during a time when you can’t enjoy your property as usual.
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.